Insights

Over the last few days we have seen news reports about a new taskforce due to be launched by HMRC. This time they are targeting businesses and high net worth individuals based in the London and East Anglia; areas that are suspected of under-declaring their income levels, or in HMRC’s words, having ‘hidden wealth’. 

These days HMRC rarely targets an area or profession for the sake of it and so this initiative is likely to be the result of third party information being made available, which helps to identify potential sources of undeclared income and thus additional revenues. HMRC has invested heavily in its new technology system, Connect, to help it to identify potential targets for investigation. The Connect systems works by filtering a wide array of information from official and unofficial sources e.g. bank records, tax returns, property management records and expenditure on luxury goods. The system is highly sophisticated and can even scan activity on social media and correlate this against income levels reported on tax returns. Read more about how Connect works in our earlier blog on this topic.

In this latest taskforce, HMRC are reputedly focusing on two types of taxpayer: those who are known to have offshore bank accounts but who have not already made a voluntary declaration as part of previous disclosure campaigns, or those who appear to be living a lifestyle beyond their means.

We have written frequently about the various initiatives launched by HMRC to catch taxpayers who have underpaid tax or under declared their income levels. There is still an opportunity to make a voluntary disclosure and notify HMRC of a “potential error”. Regardless of whether the underpayment was an error or intentional tax avoidance, voluntarily approaching HMRC has many advantages. Although you will still be required to pay any outstanding amounts of tax, interest and penalties calculated by HMRC, they will typically take a more lenient view of offenders who make a voluntary disclosure and a significantly lower penalty is likely to be applied.

Our advice to anyone who thinks they may have underpaid tax or not declared the right amount of income and wants to make a disclosure is to discuss their position with us before approaching HMRC.

For more information on making a voluntary disclosure to HMRC or any aspect of tax planning please contact Lesley Stalker by emailing las@rjp.co.uk.